Kirsten makes 100,000 units per year of a part called B345 gasket for use in one of its products. The following table provides data concerning unit production costs of B345 gasket:
Direct Materials: $0.15
Direct Labor: $0.10
Variable Manufacturing Overhead: $0.13
Fixed Manufacturing Overhead: $0.24
Total Manufacturing Costs Per Unit: $0.62
An outside supplier has offered to sell Kirsten Corporation all B345 gaskets it requires. If Kirsten Corporation decides to accept the offer and discontinue making B345 gaskets, 25% of above fixed manufacturing overhead costs would be avoided.
Question: Assume that Kirsten Corporation could use the facilities presently devoted to production of B345 gaskets to expand production of another product that would yield an additional contribution margin of $10,000 annually. What is the maximum unit price Kirsten Corporation should be willing to pay the outside supplier for the B345 gasket?